Tesla: What Ford’s new disclosures and guidance tell us about upcoming competition
Ford disclosed financials and offered guidance for its electric vehicle business last week, from which, leveraging our recent work on the economics of car manufacturing, we could estimate the cost trajectory Ford ambitions.Our analysis suggests Ford targets to halve its cost per car, as it scales production, radically simplifies its platforms, innovates, and integrates battery manufacturing. It is a very ambitious goal, over 4 years, and probably a best possible outcome for the manufacturer and similar peers.
Nevertheless, our analysis also suggests that if Ford were to succeed in this endeavor, it would still not be able to put any material competitive pressure (i.e. no margin pressure and no market share pressure) on Tesla, as it would still have a 20% higher cost per car.
This analysis strengthens our conviction on the strength and sustainability of Tesla’s competitive advantages.
Tesla designs, develops, manufactures, sells and leases electric vehicles and energy generation and storage systems, and provides services related to its products. The company operates as two reportable segments: automotive, which includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits; and energy generation and storage, which includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products, services related to such products, and sales of solar energy system incentives.
Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.
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